Dickinson et al v. SunTrust Mortgage Inc et al

Filing 65

ORDER granting 61 Motion to Dismiss. The Dickinsons' second amended complaint, 60 , is dismissed with prejudice. Signed by Chief Judge Brian S. Miller on 4/23/2015. (jak)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF ARKANSAS
JONESBORO DIVISION
ROBERT DICKINSON et al.
v.

PLAINTIFFS

CASE NO: 3:12CV00112 BSM

SUNTRUST MORTGAGE, INC. and
FEDERAL NATIONAL MORTGAGE ASSOCIATION

DEFENDANTS

ORDER
The motion to dismiss filed by defendants SunTrust Mortgage, Inc., and Federal
National Mortgage Association (“Fannie Mae”) [Doc. No. 61] is granted.
I.

BACKGROUND

Viewed in the light most favorable to plaintiffs, the non-moving parties, the facts are
as follows. In 2008, plaintiffs Robert and Pamela Dickinson (“the Dickinsons”) refinanced
their mortgage loan with First National Bank. First National immediately assigned the
mortgage and the associated promissory note to Mortgage Electronic Registration Systems,
Inc., and SunTrust later became the loan servicer. Some time later, SunTrust initiated
foreclosure proceedings on the Dickinsons’ home and charged them various associated fees
and expenses, including $275 for courthouse posting, $295 for statutory internet posting, and
$360 for foreclosure attorney fees. The Dickinsons filed this lawsuit alleging that the fees
and expenses charged by Suntrust violate the Arkansas Deceptive Trade Practice Act
(“ADTPA”), and constitute unjust enrichment. Defendants move to dismiss.
II.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits dismissal when the plaintiff fails to

state a claim upon which relief can be granted. To meet the 12(b)(6) standard, a complaint
must allege sufficient facts to entitle the plaintiff to the relief sought. See Ashcroft v. Iqbal,
556 U.S. 662, 663 (2009). Although detailed factual allegations are not required, threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, are
insufficient. Id. In ruling on a motion to dismiss, materials embraced by the pleadings, as
well as exhibits attached to the pleadings and matters of public record, may all be considered.
Mills v. City of Grand Forks, 614 F.3d 495, 498 (8th Cir. 2010). Additionally, to survive a
motion to dismiss, ADTPA claims must be pled with the particularity required under Federal
Rule of Civil Procedure 9(b).

Jarrett v. Panasonic Corp. of N. Am., CASE NO.

4:12CV00739 SWW, 2013 WL 8148643 (E.D. Ark. June 21, 2013).
III.
A.

DISCUSSION

ADTPA Claims
Defendants’ motion to dismiss is granted because the ADTPA does not apply to

“[a]ctions or transactions permitted under laws administered by... a regulatory body ... acting
under statutory authority of ... the United States....” Ark. Code Ann. § 4-88-101(3).
Moreover, the Dickinsons have failed to sufficiently plead an ADTPA claim against either
defendant.
1.
a.

ADTPA Application

Application to Fannie Mae

The ADTPA claim against Fannie Mae is dismissed because the ADTPA does not
apply to foreclosure fees charged by Fannie Mae. The Secretary of the United States
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Department of Housing and Urban Development (“HUD”) has regulatory power over Fannie
Mae and is required to enforce the provisions of the Federal National Mortgage Association
Charter Act (“Fannie Mae Charter”). 24 C.F.R. § 81.1(a). The Fannie Mae Charter broadly
gives Fannie Mae the power “to purchase, service, sell, or otherwise deal in any mortgages.”
See 12 U.S.C.A.§ 1717; Dickinson v. SunTrust Nat’l Mortgage Inc., 451 S.W.3d 576, 581
(Ark. 2014). Consequently, Fannie Mae’s ability to charge fees related to foreclosures is
broadly controlled by the Fannie Mae Charter and regulated by the HUD. See Dickinson,
451 S.W.3d at 581–82. Because the fees charged by Fannie Mae are impliedly authorized
by the charter and regulated by the HUD, the ADTPA does not control them.
b.

Application of ADTPA to SunTrust’s Actions

Defendants’ assertion that the ADTPA does not apply to SunTrust’s actions because
it is subject to state regulation is unsupported and overly broad. Defendants incorrectly read
subsection 4-88-101(a)(3) to exempt all actions taken by an entity regulated under Arkansas
law. See Ark. Code Ann. § 4-88-101(a)(3) (providing that the ADTPA does not apply to
actions or transactions “permitted under laws administered by... a regulatory body”).
Defendants failed to show that a mortgage servicer’s ability to charge and collect foreclosure
related fees is regulated by any agency under Arkansas law. Therefore, defendants have
failed to show that the ADTPA does not apply to SunTrust’s actions.
2.

Sufficiency of The Dickinsons’ Second Amended Complaint

Even assuming that the ADTPA applies to both defendants, the motion to dismiss is
granted because the Dickinsons’ second amended complaint (“the complaint”) fails to allege
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any deceptive or misleading practice. The phrase “unconscionable, false, or deceptive” used
in subsection (a)(10) of section 4-88-107 cannot be converted into a general reference to any
unlawful conduct. Universal Cooperatives, Inc. v. AAC Flying Serv., Inc., 710 F.3d 790, 795
(8th Cir. 2013). It must be interpreted to reach the same instances of false representation,
fraud, or the improper use of economic leverage in a trade transaction that are enumerated
in subsections (a)(1) through (9). Id. Accordingly, regardless of the subsection relied upon
by a plaintiff, a prima facie case under the ADTPA requires: (1) a deceptive
consumer-oriented act or practice which is misleading in a material respect, and (2) injury
resulting from such act. See Skalla v. Canepari, 430 S.W.3d 72, 82 (Ark. 2013).
The complaint does not allege that the Dickinsons were deceived in any way.
Importantly, the Dickinsons expressly contend they are not alleging “any fraud, deceit, or
misrepresentations.” See Pl.s’ Opp. to Defs.’ Mot. to Dismiss (“Pl.s’ Brief”) Part II., Doc.
No. 63. The complaint simply alleges that “the ... fees charged [by defendants] were
excessive and unconscionable.” See Second Amended Complaint ¶ 65, Doc. No. 60. Absent
allegations of a deceptive act or practice, the complaint fails to plead an ADTPA claim upon
which relief may be granted. The Dickinsons’ ADTPA claims are therefore dismissed.
B.

Unjust Enrichment Claims
The Dickinsons correctly argue that the mortgage contract does not preclude their

unjust enrichment claims because it does not fully address the subject of excessive
foreclosure fees. See QHG of Springdale, Inc. v. Archer, 373 S.W.3d 318, 325 (Ark. App.
2009). Defendants’ motion to dismiss, however, is granted because the complaint fails to
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sufficiently allege that defendants were unjustly enriched.
Unjust enrichment only occurs when a party has received something of value, to
which he or she is not entitled, and which he or she must restore. Hatchell v. Wren, 211
S.W.3d 516, 522 (Ark. 2005). A party who is free from fault cannot be unjustly enriched
merely because the party has opted to exercise a legal or contractual right. Id. Accordingly,
an unjust enrichment lawsuit can only succeed where the defendant has received something
of value from the plaintiff under such circumstances that, in equity and good conscience, the
defendant has no right to retain. Merchants & Planters Bank & Trust Co. of Arkadelphia v.
Massey, 790 S.W.2d 889, 891 (Ark. 1990).
The Dickinsons do not challenge defendants’ right to collect fees in relation to
foreclosure proceedings. See Pl.s’ Brief, Part II., Doc. No. 63. The complaint simply alleges
that defendants were unjustly enriched because the foreclosure fees they charged or collected
were excessive and unconscionable. See Second Amended Complaint ¶¶ 68–71, Doc. No.
60. The complaint, however, fails to allege any facts indicating how or why the alleged fees
were excessive. As such, the complaint fails to sufficiently allege that defendants, which
have a legal and contractual right to collect foreclosure fees, were unjustly enriched by
collecting such fees. Therefore, it fails to state a claim for unjust enrichment upon which
relief may be granted. See Deutsche Bank Nat. Trust Co. v. Austin, 385 S.W.3d 381, 388
(Ark. App. 2011) (holding that an unjust-enrichment award is based upon the value of the
benefit conferred upon the party unjustly enriched).
C.

Declaratory Judgment
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Consistent with the conclusions set forth in Part III. A and B above, the Dickinsons’
requests for declaratory judgment and injunction are denied.
IV.

CONCLUSION

For these reasons, defendants’ motion to dismiss [Doc. No. 61] is granted and the
Dickinsons’ second amended complaint [Doc. No. 60] is dismissed with prejudice.
IT IS SO ORDERED this 23rd day of April 2015.
________________________________
UNITED STATES DISTRICT JUDGE

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